A rumor about a change in ownership has brought a low-profile liquor industry giant into the spotlight. On January 20th, Sichuan Swellfun Co.,Ltd. issued a performance forecast for 2025, indicating a dramatic plunge of over 70% in net profit. Prior to this, speculation was already circulating in the market that its major shareholder, Diageo, might sell its stake. Sichuan Liquor Group has emerged as one of the rumored potential buyers. In mid-January, Cao Yong, the Chairman of Sichuan Liquor Group, led a team for an on-site inspection. Cao stated that Sichuan Swellfun "provides valuable experience for Sichuan Liquor Group's initiative to build a 'Dream Factory for Chinese Baijiu'."
This liquor enterprise, established a mere eight years ago, aspires to join the "first tier of Chinese baijiu producers." At the end of 2025, Cao Yong unveiled an ambitious blueprint: to achieve revenues exceeding 45 billion yuan and tax profits reaching 3 billion yuan by 2030. Acquiring Sichuan Swellfun would represent a significant leap forward in realizing this vision.
The Hundred-Billion-Yuan Giant While most liquor companies are struggling through a harsh winter, Cao Yong is openly displaying his ambition. His confidence stems from performance; in 2024, Sichuan Liquor Group's revenue scale reached 38 billion yuan, and its asset size has grown 26-fold since its establishment. Cao Yong "Over the past eight years, Sichuan Liquor Group has accumulated nearly 200 billion yuan in revenue and has developed into a major liquor group with significant influence nationwide," Cao Yong declared at the end of 2025. Based on the 2024 revenue of 38 billion yuan, this scale surpasses that of Shanxi Fenjiu (36.011 billion yuan), which was ranked third in the industry that year. However, Sichuan Liquor Group's positioning is more akin to an integration and service platform for the baijiu industry. A substantial portion of its business revenue comes from supplying base liquor to other distilleries, constituting a B2B operation. Its official website states that Sichuan Liquor is China's largest producer and supplier of base liquor. "It has achieved a production capacity of 600,000 tons and a storage capacity of 1 million tons," Cao Yong revealed. For context, Yanghe disclosed an annual base liquor production capacity of approximately 160,000 tons and a storage capacity of 1 million tons, already placing it at the top tier of the industry. Sichuan Liquor Group's astonishing capacity stems from its unique role as an "integrator." Established in 2017 and ultimately controlled by the Luzhou SASAC, its initial mission was precisely to "integrate liquor enterprises and revitalize Sichuan liquor." It has aggregated over 260 small and medium-sized distilleries, both within and outside Sichuan Province, involving more than 50,000 fermentation pits for various aroma types like strong aroma and sauce aroma, forming a massive production cluster. Reportedly, Sichuan Liquor Group has made heavy asset investments, establishing a Chengdu marketing headquarters and four major bases, pioneering a new industrial model described as "owning distilleries without building them, owning fermentation pits without constructing them." With the 45 billion yuan revenue target ahead, Cao Yong needs to lead the team to grow by approximately 7 billion yuan within six years. Sichuan Swellfun's annual revenue is around 3 billion yuan; acquiring it would accomplish nearly half of that incremental task.
The Missing Brand Cao Yong, born in 1973 in Huidong, Sichuan, previously served as Vice Mayor of Luzhou City. He has been the Chairman of Sichuan Liquor Group since its inception. A major challenge he faces is the scarcity of self-owned brands, particularly high-end ones. Relatively well-known brands in the national market are few, primarily including Xufu Daqu, a daily-consumption liquor from Xufu Liquor, and Guoniang, a sauce-aroma brand actively promoted in recent years. The scale of any single brand remains significantly distant from that of leading distilleries. Taking Guoniang as an example, it promotes the slogan "A New Height for Sauce Aroma," priced at 1,599 yuan per bottle. A check of Sichuan Liquor Group's official Tmall flagship store showed sales in the single digits. "It exhibits a typical Sichuan-style sauce aroma, positioning itself against Qinghualang. Unfortunately, it lacks sufficient brand endorsement; its current market price can be discounted by 60-70%," an industry insider in Sichuan revealed. On e-commerce platforms, brands with relatively higher sales are Chidu Jiangjiu and Xufu Qingyun, with final prices per bottle both under 100 yuan. The absence of high-end brands also traps Sichuan Liquor Group in a profitability dilemma reliant on "high volume at low prices." From 2021 to 2024, its revenue grew from 28.63 billion yuan to 38 billion yuan, while profits lingered at low levels. In the first half of 2024, its gross profit margin was a mere 4.02%. Cao Yong has proposed a "Strengthening Fundamentals and Enhancing Efficiency, Five-Drives" strategy, focusing on branded daily-consumption liquor, custom liquor, and bulk liquor to strengthen its C-end business. In the daily-consumption liquor segment, it newly launched the sixth-generation Xufu Strong Aroma series and the third-generation Chidu Sauce Aroma series, with the former targeting high-frequency scenarios like family gatherings and the latter aiming to lower the consumption barrier for sauce-aroma liquor with affordable prices, building a product matrix covering both aroma types. For custom liquor, through the "Sichuan Liquor Customization" mini-program, it offers services like "custom orders starting from 1 bottle, fastest delivery in 3 days," establishing a full-scenario service system covering cities, enterprises, and individuals. In the bulk liquor sector, it attempts to break the industry偏见 of being "low-quality and non-transparent" by promoting "transparent fermentation pits + full-process traceability," aiming to become "China's premier bulk liquor supplier."
A Win-Win Option On January 15th, Cao Yong led a team to inspect Sichuan Swellfun's Qionglai base, accompanied by Lin Dong, Sichuan Swellfun's Traditional Techniques Director. Both parties described it as a "study tour" at the production level, not involving assets. However, coinciding with widespread sale rumors, the market naturally drew many connections. For baijiu enterprises, brand is a core asset. Acquiring Sichuan Swellfun would indeed help Sichuan Liquor Group compensate for its lack of brand power. On the policy front, the Ministry of Industry and Information Technology categorizes liquor brewing as a historical classic industry, explicitly supporting leading enterprises in conducting mergers, acquisitions, and resource integration. As a provincial state-owned enterprise, Sichuan Liquor Group possesses policy and resource advantages when integrating baijiu resources. From an industrial logic perspective, a "marriage" between Sichuan Liquor Group and Sichuan Swellfun would represent an integration of "capacity + brand" and "scale + profit," which would be beneficial for both parties. However, returning to practical considerations, if he wishes to advance a merger or acquisition, Cao Yong still faces funding challenges. As of the end of September 2025, Sichuan Liquor Group's monetary funds stood at only 1.77 billion yuan, while Sichuan Swellfun's market capitalization is approximately 18.9 billion yuan. Even acquiring a 51% stake would require a substantial amount of capital. Bridging this funding gap would likely require active involvement from related parties such as industrial funds, banking consortiums, and state-capital platforms. If this acquisition deal is ultimately finalized, Cao Yong's goal of leading the charge into the "first tier of Chinese baijiu producers" could accelerate significantly.
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